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Advisor Outlook: Key market themes and risks

BlackRock’s Advisor Outlook provides financial professionals context on current market conditions, macro trends, and key investment topics across asset classes.
Download the October 2026 edition Download the October 2026 edition

Key market trends

Digit 1

Long bonds face more than Fed risk

The Fed’s September projections point to higher rates through 2028. Yields have risen across the curve, driven mostly by real yields rather than inflation expectations.
Digit 2

Fundamentally supported market

Earnings strength extends beyond Q2, with estimates for coming years rising steadily. This supports our constructive outlook, especially as valuations compress.
Digit 3

Midterm spotlight

History suggests a choppier market around midterms as uncertainty mounts, but to stay invested through volatility – returns have typically improved once the event risk passed.

Watch the October 2026 Advisor Outlook video

Kristy

I’m Kristy Akullian, Head of GPS Investment Strategy, and I’m here today to walk through our October Advisor Outlook.

Oil is over $100 a barrel, the 10-year Treasury yield rose 82 basis points in Q3 to 5.28%, the Fed is leaning back toward hikes, and the midterms are weeks away.

But importantly - we’re still risk-on, because earnings growth has kept pace with all of it. Analysts raised estimates into Q3 reporting instead of cutting them, and consensus expects about 27% S&P 500 earnings growth – the highest heading into a season since 2021.

The pressure is showing up in rates. Most of this year’s rise in yields has come from real yields, not breakevens – investors aren’t pricing an inflation problem, they’re demanding a higher real return. Part of that is growth holding up. Part of it is competition for capital, with Treasury supply and AI-related borrowing hitting the market at the same time.

So our message heading into year-end: strong fundamentals, a higher hurdle rate.

Faye

Against that backdrop, our investment outlook is anchored on 3 main themes:

First, follow the earnings. Earnings momentum keeps us constructive on U.S. equities and AI. Semis are up around 90% YTD, and over that same period, their P/E has come down. Fundamentals look strong.

Second, put income to work without overpaying for duration. The Agg now yields about 5.6%, up from 4.3% in January, but long bonds face more than Fed risk. We prefer the front and belly of the curve and flexible strategies overreaching for the long end.

And finally, diversify your diversifiers. Hyperscalers are funding more of the AI buildout with debt, so AI now drives both stocks and credit. Liquid alternatives – potentially funded from long-duration bonds – can add differentiated sources of return.

Check out the full Advisor Outlook for more of our best thinking, and reach out to your local market team or call 877-ASK-1BLK to dive deeper into any of these themes.

iCRDSPMH1026U/S-6007067

Kristy

I’m Kristy Akullian, Head of GPS Investment Strategy, and I’m here today to walk through our October Advisor Outlook.

Oil is over $100 a barrel, the 10-year Treasury yield rose 82 basis points in Q3 to 5.28%, the Fed is leaning back toward hikes, and the midterms are weeks away.

But importantly - we’re still risk-on, because earnings growth has kept pace with all of it. Analysts raised estimates into Q3 reporting instead of cutting them, and consensus expects about 27% S&P 500 earnings growth – the highest heading into a season since 2021.

The pressure is showing up in rates. Most of this year’s rise in yields has come from real yields, not breakevens – investors aren’t pricing an inflation problem, they’re demanding a higher real return. Part of that is growth holding up. Part of it is competition for capital, with Treasury supply and AI-related borrowing hitting the market at the same time.

So our message heading into year-end: strong fundamentals, a higher hurdle rate.

Faye

Against that backdrop, our investment outlook is anchored on 3 main themes:

First, follow the earnings. Earnings momentum keeps us constructive on U.S. equities and AI. Semis are up around 90% YTD, and over that same period, their P/E has come down. Fundamentals look strong.

Second, put income to work without overpaying for duration. The Agg now yields about 5.6%, up from 4.3% in January, but long bonds face more than Fed risk. We prefer the front and belly of the curve and flexible strategies overreaching for the long end.

And finally, diversify your diversifiers. Hyperscalers are funding more of the AI buildout with debt, so AI now drives both stocks and credit. Liquid alternatives – potentially funded from long-duration bonds – can add differentiated sources of return.

Check out the full Advisor Outlook for more of our best thinking, and reach out to your local market team or call 877-ASK-1BLK to dive deeper into any of these themes.

iCRDSPMH1026U/S-6007067

To obtain more information on the fund(s) including the Morningstar time period ratings and standardized average annual total returns as of the most recent calendar quarter and current month end, please click on the fund tile. Past performance is not indicative of future results. The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure (excluding any applicable sales charges) that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Explore advisor portfolio positioning in today’s markets

Advisor outlook Q326

The average monthly portfolio asset class breakdown is constructed by the underlying holdings classification. Source: Morningstar, BlackRock, Aladdin. “Advisor models” data is as of 06/30/2026, based on the 958 “moderate” risk cohort models collected by BlackRock in the 3 months ending 06/30/2026. Advisor models collected by BlackRock are grouped into 5 risk cohorts for analysis, based on total equity allocation. Models in the “moderate” risk cohort are defined as any portfolio with an overall equity allocation of between 50-65%. BlackRock’s risk model data is supplemented by asset allocation and fund characteristic data from Morningstar. The portfolios analyzed represent a subset of the industry, and not its entirety. As such, there may be certain biases present in the data that reflect the advisors who choose to work with BlackRock to analyze their portfolios.

Index strategies favored in U.S. large-cap & emerging-market equities

U.S. large-cap and emerging-market equity allocations have been predominantly index-based, while alternatives and flexible bond strategies leaned more active.

Equity portfolios tilted to smaller companies, value & select sectors

Advisor portfolios held more small and mid-cap stocks than BlackRock models and overweighted industrials, real estate, energy and utilities, while underweighting technology and communication services.

Alternatives have been growing but remain underused

Only 39% of advisor models held alternatives, although those that do allocated an average of 8.7%, with portfolios favoring gold and commodities.

Download the Q3 2026 Advisor Portfolio Insights Download the Q3 2026 Advisor Portfolio Insights

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Frequently asked questions

  • BlackRock’s Advisor Portfolio Insights analyze ~1,000 real advisor portfolios every quarter, examining asset allocation, risk and costs. Explore polling insights, key trends and identify potential areas for portfolio review in the Advisor Portfolio Insights Deck.

  • The Advisor Outlook is a monthly market resource for advisors. Each edition includes a short video from BlackRock strategists, 2–3 key market takeaways, advisor positioning insights and curated investments ideas aligned to that month's themes. It is designed to help advisors understand current market conditions and risks and opportunities for their clients.

  • The Advisor Outlook is built specifically for advisors. It is different because it:

    • Updates monthly (vs. many quarterly outlooks)
    • Frames insights around client conversations
    • Connects themes to portfolio positioning and investment ideas
    • Is designed to be consumed in under 10 minutes

  • The Advisor Outlook is designed primarily for advisor preparation, not direct client use. For client-ready content, use Student of the Market (downloadable and customizable slides built for sharing) or Investment Directions (triannual PDF). Use Advisor Outlook to inform your client conversations and see how other advisors are positioning for today’s markets.